EUs new subsidy regulation could hit India’s PLI scheme, exports: GTRI

livemint.com:

New Delhi; India’s exports to the European Union (EU) and the flagship production linked incentive scheme could attract higher degree of scrutiny after the world's largest trading bloc came out with a regulation that prohibits foreign subsidies which distorts competition, Global Trade Research Initiative (GTRI) said in a report. The new "Foreign Subsidies Regulation" is among the barrage of regulatory changes enforced by the EU that is feared will disrupt trade.

Minimizing the impact of such regulation is crucial for India as EU is among the country's largest export markets. New Delhi’s total exports to the region in FY23 were worth nearly $75 billion.

The Foreign Subsidies Regulation (FSR), that came into effect on 12 July, says that companies must begin notifying details of relevant transactions involving foreign subsidies starting from 12 October 2023. The European Commission will publish guidelines on the application of the FSR on 31 December 2023, and release an annual report on the FSR's implementation by 30 June 2024.

“The FSR covers financial contributions from non-EU governments to companies operating in/exporting to the EU's market. These contributions include direct grants, interest-free or low-interest loans, tax incentives, state-funded research and development, provision of goods or services at below-market prices, and provision of land or buildings at below-market prices," GTRI said.